Emirates cuts USA capacity as Trump tactics exacerbate already softening demand

Gulf carrier Emirates Airline is cutting back on its schedules to the United States of America, blaming policies introduced by President Trump's administration for hurting bookings. Daily flights from Dubai to Fort Lauderdale and Orlando will be cut to five a week, while flights to Seattle, Boston and Los Angeles will now be once a day, instead of twice daily for a total of 25 weekly frequency cuts.

Emirates says this is “a commercial decision in response to weakened travel demand to US”. The Gulf carriers have expanded strongly in the USA generating significant opposition from the US majors – American Airlines, Delta Air Lines and United Airlines – who together over the past couple of years have campaigned for the possible redistribution of traffic rights to balance the benefits of existing Air Service Agreement.

"The recent actions taken by the US government relating to the issuance of entry visas, heightened security vetting, and restrictions on electronic devices in aircraft cabins have had a direct impact on consumer interest and demand for air travel into the US," says the airline.

Emirates says it had been experiencing steady US growth in the years before President Donald Trump took office but had seen a "significant deterioration" of bookings for US flights over the past three months which coincides with the Trump administration's travel restrictions covering several majority-Muslim countries (but not the United Arab Emirates), stricter visa regulations, and a carry-on laptop ban on some flights from the Middle East and North Africa.

"Until the start of 2017, Emirates' operations in the US have seen healthy growth and performance, driven by customer demand for our high quality product and our international flight connections,” says Emirates, and adds that it is responding “as any profit-oriented enterprise would”, and we will redeploy capacity to serve demand on other routes on our global network, opening up growth opportunities in other parts of the globe.

The cuts will be introduced from May 1, 2017 when flights to Fort Lauderdale, Florida, will be reduced from daily to five times weekly. A similar frequency cut will also be introduced on its link to Orlando, Florida, from May 23, 2017. The second daily flights into Seattle and Boston will be removed from June 1, 2017 and June 2, 2017, respectively, while Los Angeles will be cut from a double daily to single daily offering from July 1, 2017.

Emirates serves a total of 12 destinations in the US and says it has no plans to cut its operations into Chicago, Dallas, Houston, New York (JFK and Newark), San Francisco and Washington. It says it will “closely monitor the situation” with the view to reinstate and grow “as soon as viable”.

The ‘weakening demand’ does not appear to impacting fellow United Arab Emirates (UAE) operator Etihad Airways which says it has experienced "no significant change in demand" on flights to and from the United States in recent weeks.

“Demand continues to remain strong on all 45 weekly services between Abu Dhabi and our six US gateways of New York, Washington, Chicago, San Francisco, Los Angeles and Dallas,” says the airline, and it still plans to introduce an A380 on a second Abu Dhabi – New York JFK rotation from June 1, 2017 making its twice-daily flights on the route an all superjumbo operation. “This demonstrates our ongoing commitment to the US market regardless of recent developments,” it adds.

Emirates has a much stronger network in the US than Etihad Airways and interestingly will also not be reducing capacity in five of the six markets its rival serves – Los Angeles is the only US destination served by Etihad, where Emirates will be reducing its inventory.

A closer look at Emirates’ activities in the US shows that the carrier secured average loads of between 70 and 80 per cent on its flights in 2016, but with demand obviously varying in individual markets and open to seasonality variations.

Analysis of the AirVision Market Intelligence tool from Sabre Airline Solutions shows that Emirates’ leg demand in and out of the USA was down 2.9 per cent over the first two months of 2017, compared to the same period last year. In fact year-on-year comparisons between 2015 and 2016 show there has been declining monthly demand since July 2016 with traffic levels down -13.0 per cent in the final quarter of 2016, versus 2015.

Emirates is by far the largest of the three Gulf hub carriers in the US market, carrying an estimated 610,000 passengers in 2016 compared with around 140,000 recorded by both Etihad and Qatar Airways. Like Emirates, Etihad has seen a softening of demand with levels down -2.0 per cent across the first two months of 2017 and -11.7 per cent in the final quarter of 2016 on flights between Abu Dhabi and USA, according to Sabre data.

Meanwhile, network expansion from Qatar Airways between its Hamad International Airport hub in Doha and USA shows a 33.5 per cent growth in the first two months of 2017 and a 39.4 per cent demand rise in the final quarter of last year.